Longmont-based MicroPhage files for bankruptcy protection

By Tony KindelspireLongmont Times-Call

Posted:
01/02/2013 03:16:24 PM MST

Updated:
01/02/2013 03:18:55 PM MST

Examples of the KeyPath medical testing devices made by MicroPhage are shown in this Times-Call file photo. The company filed for Chapter 11 bankruptcy protection on Dec. 28.
(Lewis Geyer/Times-Call file)

MicroPhage, a Longmont-based company specializing in bacterial detection technology, has filed for bankruptcy.

The company filed for Chapter 11 protection on Dec. 28 in the Colorado Division of U.S. Bankruptcy Court. The filing notes that the company has assets of between $500,001 and $1 million and liabilities of $1 million to $10 million. The petition does not require the company to be any more specific than that.

Using technology developed at and licensed from the Colorado School of Mines in Golden, MicroPhage was incorporated in 2002. The company moved to 2400 Trade Centre Ave. in Longmont in 2004.

The following year the company narrowed the focus of its bacterial detection technology to focus on bringing products to market that would be used in clinical applications. The products, later branded as KeyPath, were instrument-free blood detection devices similar in size and appearance to home pregnancy kits. The kits were meant to detect the presence of methicillin-resistant (MRSA) and methicillin-susceptible (MSSA) staph infections in hours, rather than the procedures that were on the market at that time, where test results could take up to three days.

MicroPhage timeline

2002: MicroPhage is incorporated to commercialize a bacterial detection technology licensed from the Colorado School of Mines in Golden.

2004: After raising its first investment round from a group of angel investors, MicroPhage relocates to 2400 Trade Centre Ave., in the Longmont Entrepreneurial Network building.

2005: Though its testing kits have the potential for a wide variety of uses, MicroPhage decides to narrow its focus to clinical applications -- specifically, testing for bacteria and antibiotic susceptibility.

2010: The company's MRSA/MSSA testing kits are formally submitted to the Food and Drug Administration for approval.

2011: MicroPhage announces that Cardinal Health will be the exclusive distributor in the U.S. and Canada for its testing kits.

Dec. 2012: MicroPhage files for Chapter 11 bankruptcy protection.

The company received permission to market its test kits in Europe in 2009 and received Food and Drug Administration approval in 2011 to begin selling its kits in the U.S.

In the fall of 2011 the company signed an exclusive distribution agreement with Ohio-based Cardinal Health, a Fortune 500 company and one of the largest medical products firms in the country. The deal gave Cardinal Health the right to sell KeyPath kits in the U.S., U.S. territories and Canada. In exchange, Cardinal Health was to provide MicroPhage with operational funding for the development and commercialization of new productions using the same technology.

According to the bankruptcy filing, Cardinal Health is listed as the largest creditor of MicroPhage, with $2 million in credit to the Longmont company, $1 million of that secured. The second largest on the list of unsecured creditors was the Denver law firm of Patton Boggs, which is owed $139,800. Also listed was CPC Clinical Research of Aurora, which is owed a little more than $89,000.

Attempts to reach MicroPhage and its CEO, Don Mooney, who took that job in February of 2011, were unsuccessful Wednesday.

A call to Cardinal Health in Ohio also was not returned.

Jack Wheeler co-founded MicroPhage in 2002, was later CEO and left his job as a consultant for the company last June, but not before helping put the Cardinal Health deal together. He said Wednesday he had not heard the company had officially filed for bankruptcy but was aware it was having problems.

"I'm disappointed," Wheeler said. "I think that the technology was extraordinarily strong. It was unfortunate that we didn't have the significant funding the last four or five years (that was needed).

"In the field of clinical diagnostics, you need significantly more investments than an angel investor can provide."

Angel investors -- more than 100 of them -- funded MicroPhage until the Cardinal Health deal was struck.

Last summer Brian MacDonald, MicroPhage's vice president of marketing and sales, told the Times-Call that his company had just started to get some customers and was in talks with more than two dozen other potential customers. One customer touted at the time was the University of Texas Medical Branch in Galveston, Texas.

Also, in July, the company issued a press release that said it had received FDA approval to enter into clinical trials that would allow it to expand its customer base to reach more than 90 percent of U.S. hospitals. That set of trials had to do with the type of blood culture systems used by most hospitals.

Under the FDA's original approval, the KeyPath kits were cleared for use with one of the three types of blood culture systems typically used in this country. That system was used by about 45 percent of hospitals. Getting access to an additional 45 percent of hospitals would have required more clinical trials, but conducting those trials would have taken the significant investment Wheeler talked about, and those dollars never materialized.

Wheeler said that at its peak, MicroPhage employed more than 20 people, but he believed it was down to fewer than 10 when it filed bankruptcy.